An update from the PFS as the Pension Transfer Gold Standard builds momentum
Following the launch of the Pension Transfer Gold Standard in early April, more than 600 advisers have so far applied to adopt the new code. This has been an excellent start to what is fast becoming a high-profile and widely valued initiative that illustrates what the financial services industry can achieve when it works together for the common good.
The Gold Standard, which commits a firm and its advisers to nine principles of good practice, was developed by the Pension Advice Taskforce. The taskforce is an industry-wide representative body that was established following the fallout from the closure of the British Steel Pension Scheme in 2018.
The Gold Standard underpins good practice for safeguarded and defined benefit (DB) pension transfer advice, going beyond minimum requirements when giving financial advice in this important but often complex advice area. It is, of course, a voluntary code, but its real value comes from helping to ensure that consumers are better informed, understand what good advice looks like, appreciate what is involved in the advice process and, critically, where they can find access to it.
This issue of consumer engagement is ultimately key to the long-term impact the taskforce hopes this initiative will have. In addition to the requirement that all adopters of the Gold Standard give it prominence within their business and ensure clients and potential clients have access to the Consumer Guide to the Gold Standard at the earliest opportunity, the Pension Advice Taskforce has also been working with both the Single Financial Guidance Body (now renamed the Money and Pensions Service) and the Pensions Administration Standards Association (PASA) to maximise such engagement.
As a direct result, the Money and Pensions Service’s Retirement Adviser Directory will soon be including the Gold Standard banner logo next to firms and advisers that have adopted the standard, to help consumers find an adopter.
John Govett, CEO of the Money and Pensions Service, said: “We welcome the Pension Transfer Gold Standard as a great industry initiative designed to help consumers find the specialist advice they need when considering whether to transfer safeguarded pension benefits. The Money and Pensions Service supports industry-led schemes that seek to safeguard consumers and we look forward to working with advisers, firms and their professional bodies to ensure that customers feel confident in seeking the help they need.”
PASA, which exists to promote and improve the quality of pensions administration services for UK pension schemes is also liaising with the taskforce, to actively encourage the administration community to include the consumer guide alongside all transfer quotations.
Margaret Snowdon, sponsor of PASA’s DB Transfers Working Group, said: “We continually support any initiative that seeks to improve the quality of transfer advice and helps members gain efficient and safe access to their savings. As such, the Pension Transfer Gold Standard is a vital step forward in helping members build a better understanding of what good advice looks like and where to find it.”
At much the same time as the Gold Standard was launched, the Financial Conduct Authority (FCA) implemented a rise in the Financial Ombudsman Service’s compensation limit from £150,000 to £350,000 (effective from 1 April). While this timing was not ideal, coming on the back of an already hardening PI market, the Pension Advice Taskforce has worked closely with PI insurers in developing the Gold Standard.
At the PFS Graduation Ceremony in April, Keith Richards, CEO of the PFS, was able to confirm that insurer Liberty had made the Gold Standard a quality seal for its PI products. Liberty will be making the Gold Standard a condition of cover for those firms wanting DB transfer cover. Other insurers have indicated they are also considering requiring advisers to confirm a commitment to the standard going forward.
Financial planner Darren Cooke, of Red Circle Financial Planning, was quoted recently in Financial Adviser, saying the poor practice seen in DB transfer advice made it clear that standards needed to be higher.
“The PFS Gold Standard is one very good way of moving this forward,” he said. “If you want to stay in this area of advice, I think you must be prepared to reach ever-higher minimum requirements. The fact the PI insurers are now adopting the PFS Gold Standard is just one of those and if it helps keep PI premiums for firms lower while delivering better client outcomes, all the better.”
To find out more about the Pension Advice Gold Standard and how to apply, full details as well as copies of adviser guides are available via the PFS website: thepfs.org/ptgs
In addition, take a look at the consumer-facing material on the site’s consumer landing page: thepfs.org/ptgsconsumer
If you have questions or simply want to know more about this initiative, please contact the Pensions Advice Taskforce via: Pat@thepfs.org